By Lori Smith, Ph.D., SeniorResearch Associate at AEO

As National Small Business Week garners heightened attention, understanding the profound influence of small enterprises on the U.S. economy becomes imperative. With a staggering 99.9% of all businesses classified as small, according to recent data, the significance of this sector cannot be overstated.  In response to this, Association of Enterprise Opportunity, missioned to serve as the voice of small businesses and the eco-system that supports them has released its 2024 Small Business Fact Sheet in celebration of National Small Business Week.

Natalie Madeira Cofield, President and CEO of the Association for Enterprise Opportunity (AEO), underscored this, stating, “This week provides an exciting opportunity to share the tremendous impact small businesses have across the nation. Small businesses are the backbone of our economy, driving innovation, creating jobs, and fostering economic resilience.”

In terms of employment, small businesses employ nearly half of the private sector workforce, with those employing fewer than 10 individuals constituting one-quarter of the U.S. workforce. Astonishingly, these enterprises generate over $4 trillion in annual sales and receipts, eclipsing the combined output of major sectors like Information and Construction.

Click here to download AEO’s 2024 Small Business Fact Sheet.

Demographically, minority-owned small businesses are progressively amplifying their presence in the economic landscape, particularly in underserved communities. From 2012 to 2020, Hispanic-owned, Asian-owned, and Black-owned small businesses experienced notable growth rates of 46%, 44%, and 34%, respectively, outpacing overall business growth. Similarly, women-owned enterprises surged by 26%.

Regional disparities in business growth are evident, with the U.S. South emerging as a frontrunner, boasting a 26% surge in small business activity. Moreover, small businesses significantly bolster rural communities, where they account for over half of total employment.

However, despite their pivotal role, underserved entrepreneurs encounter formidable barriers. Access to capital remains a pressing issue, with businesses employing fewer than 10 individuals facing double the denial rate compared to larger counterparts. Furthermore, entrepreneurs of color encounter disproportionately higher denial rates for credit, exacerbating support challenges.

In light of these disparities, the imperative to support small businesses becomes even more pronounced. Not only do small business owners accrue wealth at an accelerated pace compared to their employed counterparts, but they also exhibit a propensity to reinvest within their communities and foster local employment opportunities.

Cofield further emphasized this, affirming, “Supporting small business presents an incredible opportunity to catalyze economic empowerment and foster inclusive growth across diverse communities.”

For those passionate about championing small businesses, AEO invites you to join us on May 2 at the National Press Club, where we will be hosting the summit, “Leveraging Regionalism to Empower Small Businesses.” This groundbreaking event will convene experts, thought leaders, and stakeholders to delve into strategies aimed at fostering small business growth within diverse regional landscapes. Click here to RSVP and join in the conversation.

AEO encourages you to expand the collaboration and dialogue beyond National Small Business Week. By sharing insights and ideas with our research team at [email protected], stakeholders can collectively explore avenues to fortify underserved small businesses nationwide, igniting a new era of economic vitality and inclusivity.